Jiangsu Expressway(600377) 申万宏源·2024-12-20 07:53Investment Rating - First coverage with a "Buy" rating, target price of 19.06 RMB, implying a 30% upside from the closing price on December 18, 2024 [27][40] - Estimated 2024-2026 net profit of 4.58B, 5.17B, and 5.72B RMB, with YoY growth of 4%, 13%, and 11%, respectively [27][40] - PE ratios for 2024-2026 estimated at 16x, 14x, and 13x [27][40] Core Views - Ninghu Expressway benefits from its core location in the Yangtze River Delta, with stable traffic growth and robust income and profit trends [27][40] - The company's toll road business is the primary driver of revenue and profit, with diversified sectors poised for growth [38][39] - Asset securitization trends are expected under the "debt resolution" background, as the only listed expressway company in Jiangsu Province [38] - The company's cost structure is controllable, and its dividend payout ratio has room for improvement compared to peers [39][85] Historical Performance and ROE Analysis - Ninghu Expressway's stock price has been influenced by M&A, road expansion, traffic and earnings changes, and dividend policies [20][21] - ROE has remained between 12%-16%, with a growth period from 2015-2019 due to project investments and acquisitions [38][107] - EPS growth has been a key driver of market capitalization, with a strong recovery in 2021-2023 [111] Asset and Cash Flow Analysis - The company's asset scale has grown steadily, with non-current assets growing at a CAGR of 14% from 2014-2023 [115] - Operating cash flow has been sufficient to meet capital expenditure needs, with 2023 operating cash flow reaching 7.39B RMB [118] - Dividend payouts have been stable, with cash dividends exceeding 2B RMB annually since 2015 [120] Regional Economic Advantages and Traffic Growth - The company's core assets, such as the Shanghai-Nanjing Expressway, are located in the economically vibrant Yangtze River Delta, ensuring steady traffic growth [148][151] - Traffic volume has grown steadily, with the Shanghai-Nanjing Expressway contributing the majority of profits [153][156] - Passenger traffic on the Shanghai-Nanjing Expressway has grown faster than freight traffic, with 2023 passenger traffic reaching 898,000 vehicles per day [166] Expansion Projects and Future Growth - Key expansion projects include the Longtan Bridge, Guangjing Expressway expansion, and Xiyi Expressway expansion, which are expected to drive future growth [64][69][173] - The company's toll road business is expected to maintain stable growth, with revenue from toll roads projected to grow by 0%, 11%, and 9% in 2024-2026 [74] Cost and Dividend Analysis - The company's cost structure is stable, with depreciation, maintenance, and labor costs being the main components [67][179] - Dividend payout ratios have been consistent, with a 53.65% payout ratio in 2023, and there is potential for further improvement compared to peers [85][86]